The close: TSX dips with financials; index loses 1.1% in June
Add to ...

Canada’s main stock index fell on Friday, ending lower for the second straight month, as heavyweight financial and energy shares lost ground ahead of a holiday weekend.

The Toronto Stock Exchange’s S&P/TSX composite index unofficially closed down 31.23 points, or 0.21 percent, at 15,182.19. Six of the index’s 10 main groups ended lower.

The most influential movers on the index were its biggest banks and insurers, with Royal Bank of Canada down 0.6 per cent to $94.16 and Manulife Financial Corp off 0.7 per cent to $24.31.

The financials group, which accounts for one third of the index’s weight, lost 0.4 per cent.

The broader energy group retreated 0.5 per cent, with Canadian Natural Resources Ltd falling 1.8 per cent to $37.42.

The Canadian stock market will be closed on Monday for Canada Day.

Canada’s economy grew by 0.2 per cent in April on widespread strength, Statistics Canada said on Friday, indicating a solid start to the second quarter as the Bank of Canada mulls a hike in interest rates next month.

The increase - which matched the forecast of analysts in a Reuters poll - marked the sixth consecutive month of growth after a long slump caused when oil prices crashed in 2014.

Major U.S. stock indexes on Friday ended a volatile week on a modestly high note, boosted by Nike’s well-received quarterly report, with the S&P 500 tallying its best first half of the year since 2013.

Nike shares rose 11 percent after the world’s largest footwear maker reported a quarterly profit that topped estimates and said it would launch a pilot online sales program with Amazon.com. Nike shares gave the biggest boost to the Dow industrials and the S&P 500.

The S&P technology index ended down 0.1 per cent and posted its first monthly loss of the year, while a decline in biotech shares, which had surged of late, also limited the Nasdaq.

Tech has led the S&P 500’s 8.2-per-cent rally this year, but its recent pullback suggests investors may be cashing in those profits to rotate to other sectors.

“Are we going to see a broadening of the rally, where you see more of the financials and other sectors fill in some of the gaps?” said Alan Lancz, president of Alan B. Lancz & Associates Inc., an investment advisory firm in Toledo, Ohio.

“It hasn’t been a broad encompassing rally that I think investors will have to see a little bit more conviction rather than just in a handful of stocks,” Lancz said.

The Dow Jones Industrial Average rose 62.6 points, or 0.29 per cent, to 21,349.63, the S&P 500 gained 3.71 points, or 0.15 per cent, to 2,423.41 and the Nasdaq Composite dropped 3.93 points, or 0.06 per cent, to 6,140.42.

Industrials were the top performing sector, rising 0.8 per cent.

“When you look at some of the stocks that are doing particularly well today, they are some of those economically sensitive-type stocks,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.

“During a time when it seems like there are still a fair amount of naysayers out there about the economy and GDP, anytime you get some of those stocks showing some strength, it probably emboldens the market,” Carlson said.

With the second quarter coming to a close, the S&P 500 recorded its biggest percentage first-half gain since climbing 12.6 percent in the first six months of 2013. The Nasdaq posted its biggest first-half gain since 2009.

U.S. consumer spending rose modestly in May and inflation cooled, pointing to a slow-but-steady economic expansion. The Commerce Department data bolstered the view that the U.S. economy is rebounding in the second quarter.

Investors have been concerned about recent mixed economic data at a time that the Federal Reserve begins lifting interest rates from very low levels.

Second-quarter corporate results are set to begin in earnest in the coming weeks, with S&P 500 companies expected to post an 8-percent rise in earnings, according to Thomson Reuters I/B/E/S.

Investors have been looking for earnings to support historically high valuations, with the S&P 500 trading at about 18 times earnings estimates for the next 12 months compared to the long-term average of 15 times.

“We can talk about the economy and geopolitical risk but earnings drive the market,” said Chris Bertelsen, chief investment officer of Aviance Capital Management in Sarasota, Florida. “We’re bumping right along the top end of” historic valuation levels.

Oil climbed on Friday for a seventh straight session as a decrease in the U.S. rig count and stronger demand data from China lifted depressed prices that still finished the first half with the biggest decline for that period since 1998.

U.S. drillers decreased their number of rigs for the first time since January, according to energy services company Baker Hughes. The rig count had risen for the previous 23 weeks.

Earlier, Chinese data showed factories grew at the quickest pace in three months. Rob Haworth, senior investment strategist at U.S. Bank Wealth Management, said the Chinese data “certainly gives you hope that demand is growing globally.”

U.S. crude futures settled up $1.11, or around 2.5 per cent, to $46.04 a barrel. Benchmark Brent crude futures settled up 50 cents at $47.92 a barrel.

Both benchmarks ended the first half of 2017 with drops of more than 14 percent since Dec. 30, 2016, the largest drop since Brent and U.S. crude fell about 19 per cent in the first half of 1998.

Oil prices have generally increased in first half of most years.

Trading volume was low ahead of the U.S. Independence Day holiday weekend. Last week, crude hit a 10-month low as rises in output revived concerns about global oversupply.

The U.S. dollar fell, making dollar-denominated crude oil less expensive for investors using other currencies.

The global crude glut has knocked 16 percent off Brent crude so far this year, even though the Organization of Petroleum Exporting Countries and other major producers have agreed to cut production about 1.8 million barrels per day (bpd).

“There’s a longer term question of where are prices going to be when the market rebalances,” said Haworth.

Money managers cut their net long U.S. crude futures and options positions in the week to June 27 to the lowest since late September, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.

The market has also seen traders building short positions to the highest levels since mid-August.

Next story

| Learn More

Discover content from The Globe and Mail that you might otherwise not have come across. Here we’ll provide you with fresh suggestions where we will continue to make even better ones as we get to know you better.

Restrictions

All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited without the prior written consent of Thomson Reuters. Thomson Reuters is not liable for any errors or delays in Thomson Reuters content, or for any actions taken in reliance on such content. ‘Thomson Reuters’ and the Thomson Reuters logo are trademarks of Thomson Reuters and its affiliated companies.